The 4-year moratorium on government dues will Bharti Airtel and Reliance Jio cash flow boost of Rs 16,000 crore and better headroom to participate in 5G auctions next year, according to Nomura report.
The cash flow situation of Bharti Airtel and Reliance Jio will improve by Rs 16,000 crore due to the four-year moratorium government dues giving them more leeway to participate aggressively in the 5G airwaves action likely next year.
According to Nomura Group, the moratorium “will provide Airtel and Jio as much as Rs 11,900 crore and Rs 4,300 crore respectively in annual cash flow,” if the two telcos opt for the Union Cabinet’s relief package. These funds could be invested in 5G auctions, it said, according to a report in Economic Times.
While Bharti Airtel chairman Sunil Mittal has said his company will opt for the 4-year deferred payments of adjusted gross revenues (AGR) and spectrum payments, Jio is yet to announce its decision.
- The moratorium “will provide Airtel and Jio as much as Rs 11,900 crore and Rs 4,300 crore respectively in annual cash flow” according to Nomura
- Bharti Airtel is likely to benefit more than Jio as the latter does not have AGR dues
- Vodafone expected to get cash flow relief of Rs 24,000-25,000 crore annually due to moratorium relief
Jio’s savings will be lesser as the Mukesh Ambani-helmed telecom player only has spectrum payments to make and no AGR dues.
Vodafone Idea (Vi) which was on the verge of bankruptcy owing to its Rs 1.9 lakh crore debt and Rs 920 crore cash balance, is also expected to opt for the moratorium. However, analysts do not expect the company to participate in 5G auctions as it is yet to close its scheduled Rs 25,000 crore fundraising. The company is, however, hopeful that the telecom sector relief package will boost investor confidence which will help it to raise the funding soon, the report added.
The Rs 24,000-25,000 crore annual cash relief that Vi is expected to get will be utilised for debt reduction and expansion of 4G networks, it further added. The telecom sector relief package also allows for surrendering of the surplus spectrum after a 10-year lock-in period from the date of the auction, this will also benefit the beleaguered company. The company has “significant spectrum holding” lying unutilised for which it bid in the past, according to JM Financial.
“Vi is yet to indicate the extent of unused spectrum, but we estimate there could be savings of Rs 5,000 crore per annum if Vi surrenders unused spectrum,” it said.